Foreign investment controls in Cyprus: changes from April 2026

Cyprus introduces FDI screening: what investors need to know before April 2026

Cyprus is entering a new regulatory phase for foreign investment. With the adoption of the Foreign Direct Investment Screening Law of 2025 (Law 194(I)/2025), the country has established its first formal mechanism for reviewing inbound investments from non-EU investors. The regime will apply from 2 April 2026 and will be overseen by the Ministry of Finance.

While Cyprus has long been known for its open and investor-friendly environment, the new framework reflects a broader European shift toward protecting strategic sectors without discouraging capital inflows.

A Shift from formality to strategy

Historically, regulatory approvals in Cyprus were often viewed as a procedural step toward the end of a transaction. Under the new regime, this approach will need to change.

FDI considerations must now be addressed early — at the structuring and planning stage — as certain investments will require prior approval before completion.

This introduces a new layer of transaction management, particularly for cross-border deals involving non-EU investors.

When does approval become mandatory?

A filing requirement is triggered where three elements are present:

• The investor qualifies as a foreign (non-EU) investor
• The transaction leads to a significant level of control (25%+ participation or equivalent influence)
• The investment value is EUR 2 million or more
• The target operates in a strategically important sector

All conditions must be met cumulatively.

Strategic sectors: A broad interpretation

One of the most notable features of the law is the wide definition of “strategic importance.”

Beyond traditional sectors such as defence or energy, the regime extends to areas including:

• Financial services
• Technology and AI
• Data infrastructure and cybersecurity
• Healthcare and biotechnology
• Media, communications and tourism

This broad scope means that many businesses that would not typically consider themselves “sensitive” may now fall within the regime.

How the review process works

The screening process is structured in two phases:

1. Initial assessment (20 working days)
   The authority determines whether a full review is required
2. In-depth review (up to 65 working days)
   A substantive assessment of potential risks to national security or public order

In practice, timelines may extend if additional information is requested.

Powers of the authorities

The Ministry of Finance has wide discretion in handling transactions. It may:

• Approve investments (with or without conditions)
• Block or unwind transactions
• Impose restrictions on voting, control, or management rights

This level of authority places Cyprus in line with other EU jurisdictions that have adopted similar screening regimes.

“Call-In” Risk: even non-notifiable deals are not safe

Importantly, the law allows the authorities to review transactions even where no filing was made:

• Up to 15 months after completion for non-notifiable deals
• Up to 5 years where a mandatory filing was not submitted

This creates a degree of regulatory uncertainty that must be factored into deal structuring.

Practical implications for investors

For investors, sellers, and advisors, the introduction of FDI screening in Cyprus means:

• Earlier regulatory analysis during deal planning
• Enhanced due diligence on target activities
• Inclusion of FDI conditions in transaction documents
• Careful timing considerations and longer deal timelines
• Allocation of regulatory risk between parties

Looking Ahead

The new regime does not signal a shift away from Cyprus as an investment destination. Rather, it aligns the country with EU standards while maintaining its competitiveness.

However, the key takeaway is clear: FDI screening is no longer a formality — it is now a core component of transaction strategy.

Businesses considering transactions that may complete on or after April 2026 should begin assessing their exposure now to avoid delays, unexpected conditions, or regulatory challenges.

For further information please liaise with our experts at contact@mainpartnertrust.com

Note: The content of this article is relevant at the time of its first publication. It is intended to provide general information on the topic and does not constitute legal advice. We recommend seeking professional advice regarding your specific matter before taking action based on the information presented. For more information or consultation, please contact our tax experts by email at contact@mainpartnertrust.com

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